Rule and regulation 16 FAQs

2018 Rule and Regulation 16 fee offset proposal

What is Rule and Regulation 16?
Rule and Regulation 16 covers the pricing of SMUD fees for commercial service connections, up to the customer service panel. This includes the cost recovery for labor, equipment and overhead costs associated with providing new or upgraded electric service and metering.

What is the Rule 16 per kilowatt (kW) fee offset?
The Rule 16 Fee Offset is a proposal to offset the fee charged to developers, businesses and commercial customers for required SMUD infrastructure for new or upgraded electric service to their business. If approved, qualifying projects will receive an offset to the fee, which will help reduce their electric utility-related infrastructure connection costs.

Why are changes being made to the Rule 16 fee?
This change is being proposed to help drive economic development in the SMUD service territory.  In addition, this change is proposed to maintain and increase energy sales, through the attraction of new customers and increased load growth.  SMUD staff benchmarked utilities from around the country to understand how other utilities charge fees to the development community to determine whether SMUD’s policies are comparable. SMUD is proposing this in order to be more competitive with other electric utility service territories while encouraging growth in the local Sacramento area economy.

How will the change affect me?
For qualifying projects, developers and commercial customers will receive an offset to the estimated cost of the installation of required infrastructure for the project. Depending on the design and requirements, the offset will range from covering a portion of the estimated cost to covering all of the estimated cost. (Note: a developer and or customer will never receive more than the estimated Rule 16 design/construction cost.)

What are the types of costs that would apply to this offset with new or upgraded electric service?
The proposed offset will help cover a portion of the cost of connecting your project to the SMUD electric utility system. This includes the SMUD portion of labor and materials to install new, additional or upgraded electric service. Your costs are the amount of the line extension less the amount of the offset. The offset amount does not apply to trenching costs. 

Who qualifies for this offering?
Projects must have an estimated demand of 300kW or more as determined by SMUD. The estimated kW demand for the per kW offset amount will be determined based on the diversified load as calculated by SMUD staff.

Is there a limit for the offset amount?
Yes. Qualifying projects will not receive an offset of more than 100% of the estimated costs for labor and equipment related to SMUD installed facilities.

What is not included in the offset?
If the proposal is approved, the developer will be responsible for paying for and installing the infrastructure necessary to accommodate SMUD equipment.  This includes the developer furnished and installed underground duct system (including necessary conduits, ducts, manholes, vaults, switchgear, pads and concrete encasement of conduit where required).

How is the recommended fee going to benefit the regional economy?
Similar to the proposed change to the Economic Development Rate change, the recommended changes are designed to help the Sacramento region compete as a location for businesses to create and retain jobs, providing benefits for both SMUD customers and our community. 

How does this help keep SMUD’s rates low?
New service customers (or customers upgrading service) allow SMUD’s fixed costs to be distributed among a greater number of customers, which helps SMUD keep our rates low.

How will the Rule 16 fee offset by applied to my costs?  
Qualified businesses will receive a line item credit on their Rule 16 Invoice from SMUD.

Will the proposed change affect current commercial rates?
Implementing the recommended changes will not impact the rates of current commercial customers that do not change their electric service needs or requirements.